Assignment You are an investor looking to acquire a 150 unit apartment in Gainesville, FL. It is a class B property with no major damages. You can purchase the property for $10,750,000 today and you charge $850 a month for each unit on a 12 month lease. You also believe that your rent will grow at a constant yearly rate of 1.5% and project that you will have vacancy and collection losses of 5% annually since you account for some tenants not paying their rent on time even though you have 100% occupancy. You assume 60% of your tenants will need parking so you charge $75 a month for their parking spot. Every year maintenance and utilities will cost you $250,000 and it will grow at 2.5% yearly. You think that based on your market projections, you can sell your property in 5 years for $11,250,000 and you expect there to be selling expenses of 6%. You will not invest in this property unless you can realize an unlevered before tax return of 10%, a 14% levered return before taxes, and a 9.8% levered return after taxes on the property. Furthermore, you successfully acquired the property with 60% financed by ABC Bank with a 15-year fixed interest rate loan at 4.25% per year. You will have to pay 3% in loan expenses and you plan on using an amortization term of 15 years making this a fixed interest rate fully amortized loan. You will have yearly taxes of $115,000 for the next 5 years and you will have taxes due on sale of 4% on the property. Once you complete the model, answer the quiz questions in canvas. D Question 9 10 pts The market does a little worse than you anticipated and 10% of your property remains vacant throughout the entire holding period. What does this change the Levered After Tax NPV to? $906,355 $918,746 O $929 357 $879,271 D Question 10 10 pts You incur major CapX experises of $250.000 in year 5. What does this change the Levered After Tax NPV to? $1072,235 51.050.809 $1.147826 51.100,92 Assignment You are an investor looking to acquire a 150 unit apartment in Gainesville, FL. It is a class B property with no major damages. You can purchase the property for $10,750,000 today and you charge $850 a month for each unit on a 12 month lease. You also believe that your rent will grow at a constant yearly rate of 1.5% and project that you will have vacancy and collection losses of 5% annually since you account for some tenants not paying their rent on time even though you have 100% occupancy. You assume 60% of your tenants will need parking so you charge $75 a month for their parking spot. Every year maintenance and utilities will cost you $250,000 and it will grow at 2.5% yearly. You think that based on your market projections, you can sell your property in 5 years for $11,250,000 and you expect there to be selling expenses of 6%. You will not invest in this property unless you can realize an unlevered before tax return of 10%, a 14% levered return before taxes, and a 9.8% levered return after taxes on the property. Furthermore, you successfully acquired the property with 60% financed by ABC Bank with a 15-year fixed interest rate loan at 4.25% per year. You will have to pay 3% in loan expenses and you plan on using an amortization term of 15 years making this a fixed interest rate fully amortized loan. You will have yearly taxes of $115,000 for the next 5 years and you will have taxes due on sale of 4% on the property. Once you complete the model, answer the quiz questions in canvas. D Question 9 10 pts The market does a little worse than you anticipated and 10% of your property remains vacant throughout the entire holding period. What does this change the Levered After Tax NPV to? $906,355 $918,746 O $929 357 $879,271 D Question 10 10 pts You incur major CapX experises of $250.000 in year 5. What does this change the Levered After Tax NPV to? $1072,235 51.050.809 $1.147826 51.100,92